Mumbai, July 4: The rupee cavorted to a 33-month high against the dollar today, hitting 46.31 at one point before winding up at 46.34 in a market floating on greenbacks.

Dealers say if the current trend persists, it could soon shoot above the key 46-mark. The rupee is up 3.4 per cent since the start of calendar 2003, and close to levels seen on January 23, 2001, when it had closed at 46.35.

The ballast for the rupee’s march has come from the torrent of dollars pouring in from foreign institutional investors (FIIs) and exporters. At the same time, the demand for greenback has not been enough to soak up the surge. Interest arbitrage opportunities — the chance to take advantage of higher rates — have diverted a lot of money sloshing around overseas to India, where it can still earn much more.

But the most important booster has been FIIs, which have pumped close to $ 140 million into the country's financial markets in the first four days of July.

The Reserve Bank’s apparent reluctance to contain the surge, by buying dollars itself or through state-run banks, in recent months has also fuelled the recent spike.

The rupee opened at 46.40, breached the crucial 46.40-dollar barrier and shot up to 46.36 against its previous close of 46.41. In the course of trading, it tested 46.31.

The gains over the past few weeks, already a cause of heart-burn among exporters, have forced analysts to gauge the adverse impact it could have on the balance-sheet of leading software service companies — most of which make more money by selling overseas than at home.